Center for Information, Documentation and Research Support (CIDAI)
E-mail: cidai@cidai.uca.edu.sv

Central American University (UCA)
Apdo. Postal 01-168, Boulevard Los Próceres
San Salvador, El Salvador, Centro América
Tel: +(503) 210-6600 ext. 407
Fax: +(503) 210-6655
 

     Proceso is published weekly in Spanish by the Center for Information, Documentation and Research Support (CIDAI) of the Central American University (UCA) of El Salvador. Portions are sent in English to the *reg.elsalvador* conference of PeaceNet in the USA and may be forwarded or copied to other networks and electronic mailing lists. Please make sure to mention Proceso when quoting from this publication.
     Subscriptions to Proceso in Spanish can be obtained by sending a check for US$50.00 (Americas) or $75.00 (Europe) made out to 'Universidad Centroamericana' and sent to the above address. Or read it partially on the UCA’s Web Page: http://www.uca.edu.sv
     For the ones who are interested in sending donations, these would be welcome at Proceso. Apdo. Postal 01-168, San Salvador, El Salvador.

Proceso 964
August 22, 2001
ISSN 0259-9864
 
 
 
 
 
 

INDEX

Editorial:  Important changes in ARENA
Politics:  About Araujo's resignation
Economy:  The economic situation: the first two trimesters of 2001
 
 
 
 
 
 

EDITORIAL

    The changes that ARENA has made at the head of the party are important. It can almost be said that they are surprising, because there were no external signs that the party was moving towards that direction. In fact, everything indicated that it was taking the opposite way. Walter Araujo seemed sure at the head of the party, even when his administration was creating a growing discontent. He seemed to be willing to fight for his re-election, which already had been answered to by the most traditional sectors of  the party. It did not seem as if he was willing to abandon the ancient patterns to make politics, even when he placed the ARENA apparatus in the circle of President Flores. Instead of abandoning the party to its own destiny —the coming and going of the groups that held a dispute over the internal power— he chose a potential alternative to end with the fights and to unify the different groups around a common purpose, beyond the electoral aspirations.

    Roberto Murray Meza's election as the provisional president of the party, with possibilities to be elected for that position in a permanent status and to accept al last the presidential candidacy, he places ARENA before new perspectives. With the new direction, the party has a unique opportunity to abandon both its old ideas and actions, and to transform itself into a more rational and conservative institution, and with a better capacity to improve the management of the public affairs. This is not easy; however, if the new direction keeps a wide range perspective and counts with the necessary political support inside ARENA, it could be placed towards that direction.

    Right after the change was announced, the leaders of some of the sectors —who were unhappy with Araujo's direction— changed their discourse. Some of the more traditionalists are already talking about abandoning the old mottos which gave the identity and a fighting flag to ARENA in the past decades. It is difficult to predict if the party is willing to go beyond cosmetic changes, because the necessary reform goes beyond abandoning some of their mottos. For the country's own good, this should mean a serious examination of both their outdated anti-communist ideology and their usual activities, which are very distant from morals and good manners. There are real possibilities for that. Because the new direction could open the party's windows to let the polluted air out, left behind by the old anti-communist fights, and allow some of the cold post-war fresh air inside.  A certain tedium that can be perceived from some ARENA's traditional sectors could easily allow that openness.

    The new direction counts with the resources to do that. It has the economic solvency to direct a party such as ARENA, belonging to one of the most solid Salvadoran economic blocks of power, without whose approval elevated public charges cannot be occupied. He counts, at least for now, with enough support inside the party to propel a long term adjustment plan. However, to accomplish such task it is necessary to start replacing the already known faces by collaborators with new ideas about both politics and the national reality. He also counts with an outstanding education, which most of the ARENA leaders —and also other parties’ members— lack of. This provides him with the elements to analyze the national and regional problems from a more rational and wide perspective.

    However, a good amount of both audacity and creativity are necessary to put ARENA up to date. The new direction, finally, is closer to Washington's circles of power, which is an advantage, given the critical situation through which the party and El Salvador are going. This is also dangerous, because he could incline too much towards the wishes of the United States Department of State’s officials, to the point of losing the independence of his criteria.

    On the opposite field, these changes should not be under estimated. To do so would be a serious strategic mistake. Instead, those changes should be considered in an objective way, and they should be taken as a new opportunity to clean up their own act. The FMLN can see its own situation reflected in ARENA. Both parties are going through tireless internal crisis. The steps of ARENA should be encouraging for the FMLN. The fact that ARENA has taken that step first, should not be an obstacle not to do something more. To follow ARENA's example should not make the FMLN feel inferior to it. It should be acknowledged once again that the right-wing has more political perspective and more ability to perform than the left-wing. When it comes to this subject, there would be nothing wrong with learning from it.

    To continue with the division that, on the other hand, has a lot of artificial ingredients, would be to condemn the party not only to an electoral failure, but also —and more importantly— to condemn it as a fundamental reference for the popular aspirations. While its rival improves itself, adopting the best alternative available, the FMLN cannot go on with its mutual contradictions, with the jealousy that weakens its direction, with the exaggerated personal starring roles, with the power ambitions and the lack of political sense that has characterized its members until this day. In addition, the changes that are announced in the right-wing, turn out unnecessary the coquetry of the so called renovators.

    The FMLN's main challenge is inside of it, inside some leaders trapped in their past and astonished by power. They are not only tied up to old ideological structures, but mostly trapped by divisions that go far back in time to the origins of the revolutionary movement. They have not been able to overcome that situation despite the war, negotiation, and transaction. The roots of such divisions are more personal than social. Those divisions do not come from a service attitude towards people, but from old and new disputes and personal ambitions.

    On the other hand, the power and its glitter have become an almost irresistible temptation. It seems as if it was all about obtaining power with the idea —very outdated indeed— that with it you can accomplish the changes you want. Given the present circumstances, the ones imposed by the hegemonic economic block, as well as the international reality, we would have to discuss how much can you really change with power. The truth is that power can mean much less than one can actually believe. If instead of considering their power aspiration as a priority, they would start serving people —and most of all, the poor majority— things could start changing.

    "It is an act of braveness that demonstrates a great political maturity and a personal detachment out of the ordinary". This tenor is the author of the explanations that the ARENA authorities offered to the public opinion in the events of Walter Araujo's resignation (a surprise?) from the presidency of The National Executive Council (COENA, in Spanish). The day before his resignation —August 15th —, El Diario de Hoy had published an article about ARENA's internal disputes over the COENA's presidency. Among all the candidates, Araujo apparently had the best chances to stay at the head of the COENA for the September elections, since he seemed to count with the trust of the department directors, according to the newspaper.

    The surprise was a day after that, when the supposedly well supported candidate for the reelection announces his irrevocable resignation, for the benefit of Roberto Murray Meza, the beer industry businessman, one of the most appreciated characters by all kinds of ARENA members. Araujo said that he was retiring after a well meditated analysis of the country's situation. Reading between the lines of Araujos's resignation —an expression of his weakness for some people, a sample of his political maturity for others—, a door opens to the next ARENA General Assembly in September. However, on the other hand, the news of Murray's new presidency at the COENA, for the transition period, has caused a cascade reaction among the different belligerent groups inside the right-wing party: some of them say that they will abandon their demands in order to support the beer industry businessman's persona.

    ARENA is preparing itself for its National Assembly, on September 30, without inconveniences, following the party’s best tradition. There are rumors already about Murray Meza as the ideal person to be confirmed by the assembly, and about his capability to conduct the official party to the next elections. In this context, ARENA seems to be preparing a new leadership, capable to cool down the divisions that Alfredo Cristiani's resignation created, after the electoral defeat in March 2000.

    How to explain Araujo's sudden decision when he seemed to count with the necessary votes to continue resisting the attacks that the founders' movement had generated, to which, in a way, Mario Acosta Oertel added himself to? In the first place, Araujo's decision has to be interpreted as a smart move to avoid the storm that he foresaw in September's National Assembly, due to the discontent of the founders. Despite that Araujo could have counted with enough support from the department directors to be reelected, since in ARENA the members' last names and their economic resources are more important than the foundation's support, it is almost certain that they would have achieved the capitulation of the COENA’s president. In such scenery, chances are that Mario Acosta Oertel would have been the most beneficiated one. And to avoid such an uncomfortable situation, Araujo chose to give the party to Murray, in a moment in which he could still make an honorable departure.

    On the other hand, Araujo's move not only allows him to win the battle against his adversaries —who would not rest until defeating him—, it also demonstrates that, in the end, the bottom line was not the party's democratization, but the satisfaction of certain people's personal ambitions. A proof of this situation is that as soon as the arrival of Murray Meza was announced, ARENA's Rescue League (LAR, in Spanish) abandoned their demands for statutory reforms to establish the secret vote as a process to elect the party's authorities. The question that has to be asked here is how can a demand be abandoned so soon —supposing that this was not a curtain to cover up personal ambitions—, when no adhesion from the new authorities to such request has been received. This proves, once again, that what the founders' movement was actually looking for was to displace Araujo. In that sense, he won at that game with a bet supported by most of the ARENA members.

    In that sense, it has to be said that Araujo's move provided ARENA with more certainties and, momentarily, it allows to fight against the internal crisis, which threatened to grow stronger. In this context, Araujo makes sure that he has a place in the new group of interests which is about to shape ARENA's destinies. He avoids accusations about leading the party to a higher polarization, but without necessarily responding to Mario Acosta Oertel or Gloria Salguero's control aspirations.

    In addition, there is a clear aspect: Araujo's bet for Murray Meza. Certainly, if it is true that such bet meant an unexpected advance, it is no surprise at all. Somehow, it was clear inside ARENA that the next leader would be Murray Meza. Based on this foundation, there was a certain implicit agreement which was a pact between all of the ARENA members. An evidence of that situation —and it has been previously mentioned in Proceso— is the propaganda that is made, throughout all the levels of the party, in favor of the beer industry businessman. It was a loud secret that Murray Meza was going to be the next ARENA leader. That is why it is very probable that during the next National Assembly, just like some of the opposition leaders have sustained, the temporary director of the COENA will be elected to lead the official party to the next elections. If this is so, he would have been guaranteed with the structure that will probably launch him as the ARENA candidate for the Republic's presidency or, at least, for San Salvador's city Hall, during the 2003 elections.

    Internally, Murray Meza's arrival means a breath of fresh air for ARENA. The division that threatened to break the tradition of a monolithic party, willing to obey at any time the voice of the leader, did not seem to have any signs of improvement. In that sense, since the agreement around the image of a beer industry businessman was already being prepared, his arrival might mean a very important relief to correct the image of the internal division that was destroying the roots of the party.

    Through that line, facing the elections, ARENA will introduce itself as an organized party, capable to deal with the challenge of turning into an attractive offer for the Salvadorans and, specially, for its unhappy members. In the political national context, where most of the population distrusts the parties' authorities, that means a lot. Because if it is true that with Murray Meza's arrival ARENA does not guarantee a more numerous electoral participation of the Salvadorans, it can recuperate the vote of its sympathizers, and that is already a wining feature for a party that has the possibility of breaking up with the "hard" vote. All of this happens in a context in which the FMLN suffers from a serious internal division, and has no capability to encourage the Salvadorans who are not happy with the national politics.

    As long as ARENA's new leader knows how to combine all of these factors, he will ease the internal disputes of the main national political party. Otherwise, he could be walking into a hostile environment that could even terminate his aspirations to become the president of the Republic.

    If five years ago the “cosmetic” character of the Salvadoran macroeconomic stability was evident, with the earthquakes it is clear once again that the country is not manageable, in a mid and in a long term, under a development plan based on the transnational maquilas and the labor “exportation” to the United States. Nevertheless, if the governmental strategy does not even foresee the importance to capitalize the high consumption that the family remittances generate in order to stimulate the domestic production.

    Most of the additional demand generated by the family remittances has been satisfied with importations, rather than with the national production. In fact, there is no capacity to satisfy the alimentary local demand. The dependency on importations has become more critical as the last two ARENA governments have promoted the reduction of the importation taxes from sensible products, without asking their commercial partners to do the same. We face a situation in which the national production cannot compete with the importations and, therefore, grows with meaningless rates, while the commercial balance’s deficit (encouraged by the growing importations) increases at higher rates.

    In the fiscal field, the Salvadoran economic model also suffers from a fundamental contradiction: it intends to encourage the economic growth with activities and economic flows that are tax free. Instead, the maquila receives a small part of the public expense, which is invested in the minimal infrastructure of the maquila areas, for instance. The family remittances do not generate taxes either. This would not be a problem if the load imposed over the consumers with the creation of the Added Value Tax (IVA, in Spanish) would be enough to cover the growing public expense, but that is certainly not so.

    It does not seem odd, then again, that the economic situation indicators of the first two trimesters of 2001 reflect a new setback in the economic growth rhythm and a study in depth of the commercial balance deficit and of the public sector. A new tendency adds up to the former ones: the growth rhythm reduction of the net international reserves.

    According to the Central Bank of Reserve, during the first 2001 trimester, the Gross National Product continued with its downfall, to the point that it would have only been increased in 1.7% when in the same periods during 1999 and 2000 it would have been increased to 3.9% and 2.3% rates, respectively. It is important to mention that this behavior obeys, partly, to the earthquakes’ impact. However, it fundamentally is the product of a tendency that was already present, as the fact that shows that, between 1999 and 2000, the annual growth rates dropped from 3.4% down to 2%. At a sector level, only the manufacturer industry and the mines have had have stood out with a 7% growth during the first trimester; as far as the farming sector is concerned it grew in a 0.6%, the construction was reduced in a –1.9%, while the private services grew only 0.1%.

    About the behavior of the commercial balance, the most noticeable feature —although it is nothing new— is the drastic reduction of the coffee exportations, caused by a new reduction of the grain’s international prices. It has to be considered that during June 2000, $224 million were exported, while in the same month in 2001 only $81 million were exported, this means a reduction of 64% ($143 million). Although the sugar, non traditional and the maquila exportations were increased, it was not enough to avoid that the exportations would drop from 1,506 during June 2000, down to 1,464 in June 2001, which supposes a reduction of 2.8% ($42 million).

    As far as the importations are concerned, they continued with their usual growing tendency. They were increased in 11%, going from $2,340 million during June 2000, to $2,542 million during June 2001. The highest increase came from the intermediate goods’ importation, which went from $761 to $906 million during the same period. Instead, and as a consequence of the setback crisis-, the capital good’s importations (which is considered as an investment) was slightly reduced from $475 to $467 million.

    The final commercial balance ($1,464 million from exportations minus $2,542 million from importations) for June 2001 was increased to -$1,078 million, which means that there was a deficit that exceeded in 28% ($245 million) the one of last year’s. Formerly, this unbalance was covered with the family remittances and the capital transference, which absorbed the deficit in a regular account and caused a surplus in the capital and the financial one, respectively. For March 2001, the tradition changed, since the dreadful behavior of the commercial balance was added to the deficit obtained in the financial account for the payments’ balance to show a $–95.9 million deficit. This amount makes a strong contrast with the surplus of $181.7 million obtained in the same month of 2000.

    As if this was not enough, the fiscal deficit presents itself as a wide gap for the macroeconomic stability. The already galloping deficit’s growth rhythms (33.7% in 2000), were much faster, since the deficit went from $ -83.2 million in June 2000 to $ -166 million in June 2001, which means that the fiscal deficit was practically duplicated.

    The recently presented data are enough to notice that the relative macroeconomic stability, artificially kept by the family remittances, is not anymore an advantage for the government to indefinitely count with. The external sector’s unbalance has not been limited to the commercial balance this year; it has also gone further to the payment’s balance due to the capital and financial sub-accounts alarming deficits. This is the most outstanding aspect (because it is new) about the 2001 first semester’s indicators.

    If to all this we add the fiscal deficit’s explosive expansionist tendency and the increase of the economic setback process, there would be enough reasons to sustain a not so new thesis, whose importance has never been truly acknowledged: the economic model propelled by ARENA is not sustainable not even from the economic perspective (nevertheless from the social and the environmental one).

    The mirage of the nineties ended, we have to accept that the Salvadoran economy did not take off and it will not take off while it does not coherently articulates production, public finances and commercial balance. The trust in sustainable development is not only at the maquila and the family remittances promotion; it is also at the farming diversification and at the industrial conversion, oriented towards the satisfaction of the local added demand and to the generation of non traditional importations and revenue.

    Obviously, this development strategy goes through a higher State intervention in the economy —an issue where the governmental positions are ambiguous. To continue delaying the decision to interfere in a substantial way means to reduce the possibilities of avoiding an even worse economic crisis. In fact, to have wasted the bonanza years generated by both the family remittances and the nineties consumption tendency, constitutes by itself an enormous historical mistake.